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49 Companies including Khan Brothers, Khulna Printings Move to ‘Z’ Category

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Category Z DSE BSEC

Amidst the global impact of the COVID-19 pandemic, Bangladesh’s stock market witnessed a downturn, leading to the closure of various enterprises, both big and small. As a result, several companies failed to distribute dividends to their investors. Responding to this economic challenge, the Bangladesh Securities and Exchange Commission (BSEC) issued directives on September 1, 2020, to categorize companies facing profit distribution difficulties. According to the directive, if a company fails to announce or distribute dividends within the fiscal year, its category will be altered.

However, this provision grants affected companies only a brief respite, lasting a few days. Those companies unable to fulfill their dividend commitments by February 28 will undergo a categorical change as per the BSEC’s directive, impacting their shareholder dynamics significantly. Notably, companies engaging in trading activities on the Dhaka Stock Exchange (DSE) under ‘A’ and ‘B’ categories, despite not distributing dividends, currently remain outside the ‘Z’ category, comprising companies that have failed to pay dividends.

As of now, there are 49 such companies still operating within the ‘A’ and ‘B’ categories on the DSE, set to be reclassified as ‘Z’ category entities after February 28. The regulatory authority, BSEC, has been closely monitoring companies with weak stock shares, subjecting them to continuous surveillance. Brokering firms receiving sell (offer) and buy (demand) orders are currently under scrutiny by the regulatory body.

Recently, Dhaka Stock Exchange (DSE) has flagged concerns over Khan Brothers’ share price fluctuations and the closure of Khulna Printing’s factory. Simultaneously, 39 scrutinized companies, including Khan Brothers, Khulna Printing, Central Pharmaceuticals, Intech Limited, Keya Cosmetics, Active Fine, AFC Agro Biotech Limited, Alhaj Textile, Alltex Industries, Anlima Yarn Dyeing, Aramit Cement, Atlas Bangladesh, Aziz Pipes, Bangas, Bangladesh Building Systems (BBS), BD Thai Aluminum, Dhaka Dyeing, Delta Spinning, Far Chemicals, FAS Finance, Global Heavy Chemicals, Indo-Bangla Pharmaceuticals, International Leasing, Metro Spinning, Miracle Industries, National Feed Mill, National Tea, National Tubes, Olympic Accessories, Olympic Industries, Peninsula Chittagong, Prime Textile Spinning Mills, Regent Textile, Safko Spinning, Sonargaon Textiles, Standard Ceramic, Union Capital, Western Marine Shipyard, and Zahintex Industries Limited, have been reported to the Bangladesh Securities and Exchange Commission (BSEC) for their weak share performances.

These companies are under scrutiny for engaging in transactions in the ‘B’ category despite not paying dividends. The BSEC’s surveillance aims to maintain transparency in the stock market and ensure compliance with regulations. The list of companies reported for weak share performance includes a diverse range of industries, from textiles and pharmaceuticals to finance and manufacturing. This move by the regulatory authority reflects its commitment to closely monitor companies facing challenges in the stock market.

In addition, ten companies are engaging in transactions in the ‘A’ category without distributing dividends. These companies include Kattali Textile, Makson Spinning, Malek Spinning, New Line Clothings, Renwick Jajneswar, Ring Shine Textile, Runner Automobiles PLC, Saif Powertec, Saiham Cotton Mills, and Saiham Textile Mills Limited.

As for the ‘Z’ category, according to the BSEC’s directive issued on September 1, 2020, if a company fails to provide cash dividends for two consecutive years or does not hold Annual General Meetings (AGM) within the specified timeframe, it will be transferred to the ‘Z’ group with the commission’s approval. Furthermore, if a company’s production or operations remain suspended for six months or more, or if the net cash flow from operating activities is continuously negative, or if the company’s net asset value remains higher than the paid-up capital, it will also be transferred to the ‘Z’ category.

Additionally, companies that are unable to hold AGMs due to legal reasons or face disruptions due to force majeure events will not be reclassified to the ‘Z’ category if their production remains suspended for more than six months. Moreover, the Securities Act prohibits the stock exchange from unilaterally transferring any listed company to the ‘Z’ category without the BSEC’s approval. The stock exchange will regularly review compliance with these regulations, and any company found to be non-compliant may be transferred to the ‘Z’ category or subjected to coordination with the BSEC.

On Monday (February 5), BSEC’s Executive Director and Spokesperson Mohammad Rezaul Karim informed Orthosongbad that the opportunities previously granted to companies through notifications in response to the pandemic have been revoked. Consequently, companies will now adhere to listing regulations, and any advancements or downgrades in share categories will be by the existing rules from February 28. If any weak companies are being targeted for market manipulation, the relevant department of the regulatory body is actively addressing such cases.

Before this change, if a company failed to declare dividends, its shares would be reclassified to the ‘Z’ category the next day. Similarly, if announced dividends were not sent to AGM within a month, the same decision would be taken. The regulatory measures aim to maintain the integrity of the stock market and ensure transparency in the handling of companies facing financial challenges.

According to sources, BSEC has recently issued new directives, rescinding the previous instructions issued before November 30 of the last year. The latest notification, signed by BSEC Chairman Prof. Shibli Rubayat-Ul-Islam, addresses the reclassification of companies into the ‘Z’ category.

The notification states that companies listed on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) can now be immediately reclassified to the ‘Z’ category based on settlement or transaction regulations. Due to the BSEC’s order issued on September 1, 2020, certain companies were prevented from being transferred to the ‘Z’ category, and now, these companies are also eligible for reclassification.

The directive further mentions that companies already in the ‘Z’ category cannot engage in share trading, share transfers, or reclassification without BSEC approval. However, exemptions are provided for banks, insurance companies, and non-banking financial institutions (NBFIs), allowing their entrepreneurs or executives to participate in these activities. The new regulations are scheduled to come into effect on February 28, 2024.

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6 Stock Market Giants Awarded National Export Trophy

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Export Trophy stock market national

In recognition of their contributions to foreign exchange earnings and job creation for the fiscal year 2021-22, 77 companies received the National Export Trophy. Among them, six companies are listed on the country’s stock market, spanning various sectors.

Prime Minister Sheikh Hasina presented the trophies to the representatives of these companies at a ceremony held at the Osmani Memorial Auditorium in the capital on Sunday, July 14.

The awarded listed companies are:

Pharmaceuticals:

Gold Medal: Beximco Pharmaceuticals
Bronze Medal: Square Pharma

Textiles:

Silver Medal: Square Textiles Limited

Ceramics:

Gold Medal: Shinepukur Ceramics

Electronics:

Gold Medal: Walton Hi-Tech Industries

EPZ-Based 100% Bangladeshi-Owned Garment Industry (Knit and Woven):

Bronze Medal: Shama Denims

The ceremony was also attended by State Minister for Commerce Ahasanul Islam Titu, Chairman of the Parliamentary Standing Committee on Commerce Tipu Munshi, Commerce Secretary Md Selim Uddin, Vice Chairman of the Export Promotion Bureau (EPB) Md Anwar Hossain, and President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mahbubul Alam.

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Bearish Market Sees Rally for 3rd Consecutive Day

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dse market

Dhaka Stock Market DSE, Bourse on the first working day of the week, 14th July, ended with a losing performance in Indices and Turnover from the previous working session. This information is known from DSE sources.

622 crore 25 lakh taka shares were traded on this day. 42 crore 3 lakh less tradings were done in DSE today compared to the previous workday, July 11th, Shares worth Tk 664 crores 28 lakh shares were traded last time, Thursday.

The benchmark DSEX decreased 23.99 points or 5,482 The Shariah-based index DSES lost 4.82 points or 1,202 and the blue-chip index DS30 dropped by 5.24 points or 1,937.

Of the issues traded, 70 advanced, 297 declined and 30 remained unchanged.

Far Chemicals Industries Limited ranked top gainer on DSE, the share price increased by Tk 2.00 paisa or 9.76 percent. On this day, the share was last traded at Tk 22.50 paisa.

Sonali life Insruance Company Limited ranked top loser on the DSE, the share price dropped by Tk 2.30 paisa or 3.00 percent. On this day, the share was last traded at Tk 74.40 paisa.

DSE topped on trade is Taufika Food & Loevello Ice Cream PLC Limited 27 crore 90 lakh takas of company shares have been traded.

A total of 47 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 2 crore 3 lakh 99 thousand 277 shares of the companies were traded. The financial value of which is 43 crore 18 lakh taka

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Techno Drugs Debuts on DSE with 10% Share Price Jump

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techno drugs

Pharmaceutical manufacturer Techno Drugs Limited has commenced trading on the Dhaka Stock Exchange (DSE) today, Sunday, July 14, following its initial public offering (IPO) under the book building method. This information was confirmed by DSE sources.

Listed under the Pharmaceuticals and Chemicals sector, Techno Drugs’ trading code on the DSE is ‘TECHNODRUGS,’ and the company code is 18499.

The company’s shares began trading at Tk26.40 each.

Techno Drugs raised Tk1 billion through its IPO, with a total subscription of Tk24.87 billion . Of this, Tk24.12 billion came from general investors, and Tk611.75 million from eligible investors.

The IPO subscription period ran from June 9 to June 13. The company set the cut-off price at TK34 per share, with shares being offered to investors at a 30% discount, or Tk24 per share.

Shares were allocated to IPO applicants on July 2, 2024, with more applications received than available shares, resulting in a proportional allocation. Domestic investors who applied for shares worth Tk10,000 received 11 shares each, while those who applied for shares worth Tk1 million received 1,166 shares each.

In contrast, expatriate Bangladeshi investors received 20 shares for every Tk10,000 applied for, and 2,016 shares for every Tk1 million applied for.

The company plans to use the IPO proceeds to purchase new machinery, for BMRE (Balancing, Modernization, Rehabilitation, and Expansion) at its Narsingdi factory, construct a building at its Gazipur factory, partially repay loans, and cover issue management costs.

According to the audited financial statements for the fiscal year ending June 30, 2023, the company’s net asset value per share (NAVPS) was Tk27.74 , including revaluation, and Tk22.57, excluding revaluation.

For the fiscal year in question, Techno Drugs reported earnings per share (EPS) of Tk2.08 , with a weighted average EPS of Tk3.25 over the past five years.

Imperial Capital Limited and EBL Investments Limited are managing the IPO issue.

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